Monday, October 5, 2015

Obamacare Schadenfreude Clean Out

. . . I’ve been expecting something like this for a while, and not because I’m psychic. I kept reading articles about how well they were doing. Now, I know that sounds ridiculous, but bear with me. How does a brand new insurer that no one has ever heard of manage to make inroads against established behemoths with brand recognition? By offering a better product than the incumbents, obviously. But when you’re buying on the exchanges, “better” largely means “cheaper.”

Now, if incumbents are enjoying enormous margins, then an upstart can come into the market, underprice them a bit, and potentially make a killing. (At least, unless the incumbents decide to crush said upstart with a price war the upstart doesn’t have the reserves to ride out.) But health insurance margins aren’t particularly spectacular. Though consumers hate hearing this, the price of your health insurance is tightly tied to the amount that insurers expect to pay out in benefits -- if not for your care, then for some other, sicker person in the pool. And new rules under Obamacare make that tie even more binding than it used to be. So unless the co-ops had found some fantastic way to save money on paper clips and toner cartridges, I suspected that they were underpricing the product -- a conclusion that seems to be borne out by Pear’s article. . .

Yep, if you sell something for less than it costs you, you go broke. No big secret there. Why does it take an economist to tell us that?

Remember how Barack Obama and his fellow Democrats promised that ObamaCare would bend the cost curve downward? Expect to see a lot of Minnesotans get bent over in the exchanges instead — again. Premiums will go up at least 14%, and in some cases as much as 49%, after the state approved the rate changes from insurers yesterday:

State officials say Minnesotans buying health coverage through MNsure will pay between 14 percent and 49 percent more on average next year.
The state on Thursday released 2016 rate increases for consumers who shop on the individual market. Most Minnesotans are covered through employer health plans.

But wait — there’s a silver lining, says the state official whose office manages these rates:

State Commerce Commissioner Mike Rothman says more Minnesotans than ever will qualify for federal tax credits available through MNsure to lower the cost of health coverage.

Wow! People can get more tax credits, using money that comes from … er … other taxpayers, especially medical providers and manufacturers. They will have to raise their rates to keep up, which means that premiums will have to go up again, and that means … well, who can think that far ahead? Not Democrats, certainly.

A key federal program designed to cushion health insurers' risks in the Obamacare exchanges has a massive shortfall, which could throw some insurers into financial turmoil.

Insurers requested $2.87 billion in so-called "risk corridors" payments for 2014, but will only receive $362 million, or 12.6%, said the Centers for Medicare & Medicaid Services, which oversees Obamacare.

The risk corridors program's goal is to help insurers transition into the individual exchanges, which opened in 2014. Insurers had a tough time setting premiums since they didn't know how sick their new customers would be.

Under the three-year program, insurers whose premiums exceeded claims pay into the fund, while their peers who didn't charge enough premiums to cover claims could draw from it.

And you wonder why health insurance policies under Obamacare are skyrocketing?

Rep Luis V. Gutiérrez, one of Congress’ most outspoken advocates for immigrants, on Wednesday called for expanding the Affordable Care Act to cover all of the estimated 11 million undocumented migrants in the United States.

“The goal is to make integration and inclusion real for millions of families that are locked out under current law,” the Illinois Democrat said in a floor speech introducing his proposed legislation.

“As it stands right now, undocumented immigrants are not subject to the individual mandate and cannot buy into health insurance exchanges even if they use their own money. My legislation will change that. It says that we stand for inclusion.”

Citing last week’s papal address to Congress (the pope repeatedly urged U.S. lawmakers to follow “the Golden Rule”), Gutiérrez said: “Doing unto others as you would have them do unto you means moving forward with no restrictions on which brother and sister and neighbor we think of as ‘eligible’ or ‘deserving.’”

State Senator Richard Lara has already moved a bill through the California State Senate that would allow illegal immigrants to buy unsubsidized health insurance in the state’s Obamacare exchange. The state would have to receive a federal waiver from the Obama administration before implementing it.

The bill would also extend coverage to illegal residents under the age of 19 to enroll in California’s fully paid-for Medicaid program.

The Pew Research Center has estimated that there are 2.5 million illegal immigrants in California.
. . .
SB 4 would also make it clear that a foreign person could land at LAX, give Covered California a call and sign up for an almost full pay Platinum plan for a few hundred dollars a month, on the first of the following month when their coverage became effective show up at Cedars-Sinai Medical Center and have thousands of dollars of treatment, get back on the plane and go home, and then drop the coverage.

Under those terms we could expect the entire population of China to be covered under California Obamacare.